Federal Compensation Programs: Perspectives on Four Programs	 
(18-NOV-05, GAO-06-230).					 
                                                                 
Since 1969, when Congress established the Black Lung Program as a
temporary federal program to provide benefits for coal miners	 
disabled by pneumoconiosis (black lung disease), the federal	 
government has played an ever-increasing role in providing	 
benefits to individuals injured as result of exposure to harmful 
substances. Although the Black Lung Program was initially	 
designed to end in 1976, when state workers' compensation	 
programs were to provide these benefits, it was amended to make  
it an ongoing federal program. Since that time, Congress has	 
enacted several additional programs to provide benefits to	 
individuals injured by exposure to such things as radiation and  
beryllium, a substance used in nuclear weapons production. In	 
addition, the role of the federal government in many of these	 
compensation programs has expanded over time. Most recently,	 
legislative proposals have been introduced in the Senate and the 
House that would add asbestos to the list of substances for which
federally administered compensation programs have been		 
established. As Congress considers legislation to establish a	 
compensation program for those injured by asbestos exposure,	 
Congress asked us to provide information on four existing federal
compensation programs: the Black Lung Program, the Vaccine Injury
Compensation Program (VICP), the Radiation Exposure Compensation 
Program (RECP), and the Energy Employees Occupational Illness	 
Compensation Program (EEOICP). As requested, our objectives were 
to (1) provide information on the design of the programs,	 
including their purpose, financing, administration, benefits, and
eligibility criteria; (2) describe the length of time it took to 
establish the programs, the costs of establishing and		 
administering them, and the initial estimates and actual costs of
benefits paid to date; and (3) provide information on the claims 
histories of the programs, including the number of claims,	 
approval rates, and the length of time it has taken to finalize  
claims and compensate eligible claimants.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-230 					        
    ACCNO:   A41779						        
  TITLE:     Federal Compensation Programs: Perspectives on Four      
Programs							 
     DATE:   11/18/2005 
  SUBJECT:   Administrative costs				 
	     Black lung disease 				 
	     Claims processing					 
	     Claims settlement					 
	     Compensation claims				 
	     Eligibility criteria				 
	     Health hazards					 
	     Occupational health and safety programs		 
	     Program management 				 
	     Workers compensation				 
	     Cost estimates					 
	     Program costs					 
	     Program goals or objectives			 
	     Black Lung Program 				 
	     Energy Employees Occupational Illness		 
	     Compensation Program				 
                                                                 
	     PHS National Vaccine Injury Compensation		 
	     Program						 
                                                                 
	     Radiation Exposure Compensation Program		 

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GAO-06-230

Report to Congressional Requesters

United States Government Accountability Office

GAO

November 2005

FEDERAL COMPENSATION PROGRAMS

Perspectives on Four Programs

Federal Compensation Programs 

GAO-06-230

Contents

Letter 1

Appendix I Briefing Slides 7
Appendix II GAO Contact and Staff Acknowledgments 48

Abbreviations

DOE Department of Energy

DOJ Department of Justice

DOL Department of Labor

EEOICP Energy Employees Occupational Illness Compensation Program

HHS Department of Health and Human Services

NIOSH National Institute for Occupational Safety and Health

RECP Radiation Exposure Compensation Program

SSA Social Security Administration

VICP Vaccine Injury Compensation Program

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
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copyright holder may be necessary if you wish to reproduce this material
separately.

United States Government Accountability Office

Washington, DC 20548

November 18, 2005 November 18, 2005

Congressional Requesters Congressional Requesters

Since 1969, when Congress established the Black Lung Program as a
temporary federal program to provide benefits for coal miners disabled by
pneumoconiosis (black lung disease), the federal government has played an
ever-increasing role in providing benefits to individuals injured as
result of exposure to harmful substances. Although the Black Lung Program
was initially designed to end in 1976, when state workers' compensation
programs were to provide these benefits, it was amended to make it an
ongoing federal program. Since that time, Congress has enacted several
additional programs to provide benefits to individuals injured by exposure
to such things as radiation and beryllium, a substance used in nuclear
weapons production. In addition, the role of the federal government in
many of these compensation programs has expanded over time. Most recently,
legislative proposals have been introduced in the Senate and the House
that would add asbestos to the list of substances for which federally
administered compensation programs have been established. Since 1969, when
Congress established the Black Lung Program as a temporary federal program
to provide benefits for coal miners disabled by pneumoconiosis (black lung
disease), the federal government has played an ever-increasing role in
providing benefits to individuals injured as result of exposure to harmful
substances. Although the Black Lung Program was initially designed to end
in 1976, when state workers' compensation programs were to provide these
benefits, it was amended to make it an ongoing federal program. Since that
time, Congress has enacted several additional programs to provide benefits
to individuals injured by exposure to such things as radiation and
beryllium, a substance used in nuclear weapons production. In addition,
the role of the federal government in many of these compensation programs
has expanded over time. Most recently, legislative proposals have been
introduced in the Senate and the House that would add asbestos to the list
of substances for which federally administered compensation programs have
been established.

As Congress considers legislation to establish a compensation program for
those injured by asbestos exposure, you asked us to provide you with
information on four existing federal compensation programs: the Black Lung
Program, the Vaccine Injury Compensation Program (VICP), the Radiation
Exposure Compensation Program (RECP), and the Energy Employees
Occupational Illness Compensation Program (EEOICP). As requested, our
objectives were to (1) provide information on the design of the programs,
including their purpose, financing, administration, benefits, and
eligibility criteria; (2) describe the length of time it took to establish
the programs, the costs of establishing and administering them, and the
initial estimates and actual costs of benefits paid to date; and (3)
provide information on the claims histories of the programs, including the
number of claims, approval rates, and the length of time it has taken to
finalize claims and compensate eligible claimants. On October 28, 2005, we
briefed you on the results of our study. This report formally conveys the
information we presented at that briefing (see app. I). As Congress
considers legislation to establish a compensation program for those
injured by asbestos exposure, you asked us to provide you with information
on four existing federal compensation programs: the Black Lung Program,
the Vaccine Injury Compensation Program (VICP), the Radiation Exposure
Compensation Program (RECP), and the Energy Employees Occupational Illness
Compensation Program (EEOICP). As requested, our objectives were to (1)
provide information on the design of the programs, including their
purpose, financing, administration, benefits, and eligibility criteria;
(2) describe the length of time it took to establish the programs, the
costs of establishing and administering them, and the initial estimates
and actual costs of benefits paid to date; and (3) provide information on
the claims histories of the programs, including the number of claims,
approval rates, and the length of time it has taken to finalize claims and
compensate eligible claimants. On October 28, 2005, we briefed you on the
results of our study. This report formally conveys the information we
presented at that briefing (see app. I).

To provide information on these programs, we reviewed previous GAO reports
on these and other compensation programs;1 interviewed officials with the
Departments of Labor (DOL), Justice (DOJ), and Health and Human Services
(HHS), the Congressional Budget Office, and other experts about the
start-up and ongoing administration of the programs; obtained data from
the agencies on funding, costs, claims processing, number of claims, and
approval rates; examined the relevant laws and regulations governing the
programs; and reviewed studies and other publicly available information.

We reviewed information on the four programs from their inception through
the end of fiscal year 2004. We obtained initial estimates of the
anticipated costs of benefits, the number of claims for the life of the
programs, and the actual costs of benefits and claims from the date the
programs were established through the end of fiscal year 2004. We also
obtained information on the annual administrative costs for each program
for fiscal year 2004. In addition, we obtained information on the total
number of claims completed as of the end of fiscal year 2004 and reviewed
information on the time it has taken the agencies to finalize claims and
compensate eligible claimants. We did not obtain cost or claim information
on the portion of EEOICP initially administered by the Department of
Energy (DOE) that was moved to DOL as of fiscal year 2005.2 We also did
not consider the programmatic design of this portion of the program,
except where noted. Although we did not independently assess the accuracy
of the data obtained from the federal agencies, we determined the
reliability of the data by interviewing knowledgeable agency officials
regarding the completeness and accuracy of administrative data, reviewing
related documentation, and obtaining assurances that the agencies
conducted tests of the data for omissions and errors. We determined that
the data were sufficiently reliable to meet the objectives of this
engagement. Our work was conducted from June to October 2005 in accordance
with generally accepted government auditing standards.

In summary, we found that all four programs were designed to compensate
individuals injured by exposure to harmful substances. However, their
design, the agencies that administer them, their financing mechanisms,
benefits paid, and eligibility criteria, including their standards of
proof (the evidence claimants must provide to support their claims),
differ significantly. For example, some programs, such as the Black Lung
Program and EEOICP, were designed to compensate individuals for
work-related injuries, while others, such as RECP and VICP, provide
restitution to injured parties. Several federal agencies are responsible
for the administration of the programs: DOL administers the Black Lung
Program and EEOICP; DOJ administers the RECP program and shares
administration of the VICP program with HHS and the Court of Federal
Claims. Among the four programs, EEOICP and RECP are completely federally
funded. The Black Lung Program is funded by a trust fund financed by an
excise tax on coal, and VICP is funded by a trust fund financed by a per
dose tax on each covered vaccine purchased. Benefits vary among the
programs: They provide lump sum compensation and payments for lost wages,
pain and suffering, medical and rehabilitation costs, and attorney's fees.
Eligibility criteria among the programs vary widely. The Black Lung
Program covers coal miners who show that they developed black lung disease
and are totally disabled as a result of their employment in coal mines and
their survivors; VICP covers individuals who show that they were injured
by certain vaccines; RECP covers some workers in the uranium mining
industry and others exposed to radiation during the government's
atmospheric nuclear testing who developed certain diseases; and EEOICP
covers workers in nuclear weapons facilities during specific time periods
who developed specific diseases.

1See the list of related GAO products at the end of appendix I.

2GAO is currently reviewing DOE's costs and administration of this portion
of EEOICP, but the results of this work will not be available until 2006.

All four programs were established within 2 years of their enacting
legislation, and for some programs, benefits paid have exceeded the
initial estimates. As specified in its enacting legislation, the Black
Lung Program was effective upon enactment. Two of the programs-VICP and
RECP-were established within 23 months and 18 months, respectively, of
their enacting legislation. The portion of EEOICP administered by DOL was
established within 9 months of its enacting legislation, and the portion
initially administered by DOE was established within 23 months.3 Total
benefits paid for the Black Lung Program and RECP have far exceeded
initial estimates. For example, the initial estimate of benefits for the
Black Lung Program developed in 1969 was about $3 billion, while actual
benefits paid through 1976-when the program was initially to have
ended-totaled over $4.5 billion; actual benefits paid through fiscal year
2004 have totaled over $41 billion. Actual costs have significantly
exceeded the estimate for several reasons, including (1) the program was
initially set up to end in 1976 when state workers' compensation programs
were to have provided these benefits to coal miners and their dependents
and (2) the program has been expanded several times since it was
established in 1969, including several amendments that have increased
benefits and added categories of claimants. In addition, although the
costs of EEOICP benefits paid to date have been fairly close to the
initial estimate, these costs are expected to rise substantially because
of recent changes that were not anticipated at the time the estimate was
developed-payments that were to have been made by state workers'
compensation programs will now be paid by DOL.

3One portion of EEOICP, Part B, has been administered by DOL since the
inception of the program. Another portion, Part D, was initially
administered by DOE. As of fiscal year 2005, that portion of the program
was replaced with Part E, which will be administered by DOL. See appendix
I for details.

The number of claims filed and approval rates vary, but for all four
programs, it has taken the agencies years to finalize some claims and
compensate eligible claimants. The number of claims filed for three of the
programs through the end of fiscal year 2004 exceeded the initial
estimates (no estimates were available for VICP). Among the four programs,
the number of claims filed ranged from 10,900 for VICP to 960,800 for the
Black Lung Program, and approval rates ranged from 31 percent for VICP to
68 percent for RECP. As we previously reported, the agencies responsible
for processing claims have, at various times, taken years to finalize some
claims, resulting in some claimants waiting a long time to obtain
compensation. Factors that affect the amount of time it takes the agencies
to finalize claims include statutory and regulatory requirements for
determining eligibility, changes in eligibility criteria that increase the
volume of claims, the agency's level of experience in handling
compensation claims, the availability of funding, factors outside the
agencies' control such as incomplete applications being filed by claimants
and claimants' difficulties in obtaining the evidence needed to meet the
programs' standards of proof, and whether claims decisions can be appealed
in the courts.

In conclusion, the federal role in all four programs has expanded
significantly over time. All four have expanded to provide eligibility to
additional categories of claimants, cover more medical conditions, or
provide additional benefits. As might be expected, as the federal role for
these four programs has grown, so have their costs. Beyond the costs
associated with expanded eligibility, increasing medical costs and new
research on exposure levels and medical conditions associated with that
exposure that could lead to expanded eligibility may further increase
program costs. The difficulty in estimating the actual cost of these
programs may be due to the inherent difficulty of estimating the number of
claimants and anticipating expansions of the programs. However, because
these programs may expand significantly beyond the initial cost estimates,
policymakers must carefully consider the cost and precedent-setting
implications of establishing any new federal compensation programs,
particularly in light of the current federal deficit. Finally, program
design-including the extent to which programs allow claimants and payers
to appeal claims decisions in the courts and the standards of proof for
each program-can affect claims-processing time. Ultimately, these program
design decisions reflect trade-offs between processing claims quickly and
ensuring accuracy and fairness.

We provided DOL, DOJ, and HHS with a draft of this report for review and
incorporated their technical comments as appropriate.

As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after the date of the report. At that time, we will send copies of this
report to the Attorney General, the Secretary of HHS, the Secretary of
Labor, appropriate congressional committees, and other interested parties.
It also will be available at no charge on GAO's Web site at
http://www.gao.gov.

If you have any questions about this report, please contact me at (202)
512-9889 or at [email protected]. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Key contributors to this report are listed in appendix II.

Robert E. Robertson Director, Education, Workforce, and Income Security
Issues

List of Congressional Requesters

The Honorable John Conyers, Jr.

Ranking Minority Member

Committee on Judiciary

House of Representatives

The Honorable William D. Delahunt

The Honorable Sheila Jackson Lee

The Honorable Zoe Lofgren

The Honorable Martin T. Meehan

The Honorable Jerrold Nadler

The Honorable Linda T. Sanchez

The Honorable Robert C. Scott

The Honorable Adam Smith

The Honorable Chris Van Hollen, Jr.

The Honorable Maxine Waters

The Honorable Melvin L. Watt

The Honorable Anthony D. Weiner

The Honorable Robert Wexler

House of Representatives

A  Appendix I: Briefing Slides

Appendix II: A  Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Robert A. Robertson (202) 512-9889

Staff Acknowledgments

Revae E. Moran, Assistant Director; Karen A. Brown, Analyst in Charge; Don
D. Allison; David A. Eisentstadt; Jean L. McSween; Regina Santucci; Jeremy
D. Sebest; and Roger J. Thomas made significant contributions to this
report.

(130496)

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